Friday, February 17, 2012
Formal Rules Versus an Economic Approach in Dealing with Cartels: The Need for More Coherence in European Competition Law
Posted by D. Daniel Sokol
Musetescu Radu Cristian, Bucharest Academy of Economic Studies and Andreas Stamate, advocate for Formal Rules Versus an Economic Approach in Dealing with Cartels: The Need for More Coherence in European Competition Law.
ABSTRACT: Cartelizing is today among the most hunted business conduct in the world. Competition authorities from the countries where these statutes were adopted embrace the wisdom that such agreements between competitors are unquestionably anti-competitive. As opposed to other business practices, cartel agreements seem to offer an undeniable proof of intent that confers comfort for those who are investigating and prosecuting them. A cartel is today qualified as per se illegal. No further proof is needed but the formal agreement and the shared intentions. They are, at least until now, the only business practice that has lead, in certain jurisdictions, to jail terms and criminal record for individuals who were engaged in their negotiation and implementation. However, cartels are business practices that do not fundamentally aggress against any property right. From a public policy perspective, the harsh attitude towards cartels is lacking a theoretical coherence. Today, when competition policies all over the world and especially in the European Union are gradually transiting towards a more economic approach to evaluating the welfare effects of business practices, reassessing cartels is a critical imperative in the effort for a more coherent and reasonable public policy.